Infinera Corporation Reports Fourth Quarter and Fiscal Year 2013 Financial Results

                                                                            
                                              Three Months Ended            
                                  ----------------------------------------- 
                                   December 28, September 28,  December 29, 
                                       2013          2013          2012     
                                  ------------- ------------- ------------- 
Cost of revenue                   $         489 $         422 $         735 
Research and development                  2,725         2,434         2,852 
Sales and marketing                       1,965         1,853         2,802 
General and administration                1,789         1,807         1,797 
                                  ------------- ------------- ------------- 
                                          6,968         6,516         8,186 
Cost of revenue - amortization                                              
 from balance sheet*                      1,206         1,127         1,949 
                                  ------------- ------------- ------------- 
Total stock-based compensation                                              
 expense                          $       8,174 $       7,643 $      10,135 
                                  ============= ============= ============= 

                                                            
                                     Twelve Months Ended    
                                 ---------------------------
                                  December 28,  December 29,
                                      2013          2012    
                                 ------------- -------------
Cost of revenue                  $       1,871 $       2,710
Research and development                10,900        13,306
Sales and marketing                      7,624        10,450
General and administration               5,956         9,529
                                 ------------- -------------
                                        26,351        35,995
Cost of revenue - amortization                              
 from balance sheet*                     5,625         5,824
                                 ------------- -------------
Total stock-based compensation                              
 expense                         $      31,976 $      41,819
                                                   =============  =============
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
*  Stock-based  compensation  expense  deferred  to  inventory  and  deferred  inventory  costs  in  prior  periods  and  recognized  in  the  current  period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
(2)  Under  GAAP,  certain  convertible  debt  instruments  that  may  be  settled  in  cash  on  conversion  are  required  to  be  separately  accounted  for  as  liability  (debt)  and  equity  (conversion  option)  components  of  the  instrument  in  a  manner  that  reflects  the  issuer's  non-convertible  debt  borrowing  rate.  Accordingly,  for  GAAP  purposes,  we  are  required  to  amortize  as  a  debt  discount  an  amount  equal  to  the  fair  value  of  the  conversion  option  that  was  recorded  in  equity  as  interest  expense  on  our  $150  million  1.75%  convertible  debt  issuance  in  May  2013  over  the  term  of  the  notes.  These  amounts  have  been  adjusted  in  arriving  at  our  non-GAAP  results  because  management  believes  that  this  non-cash  expense  is  not  indicative  of  ongoing  operating  performance  and  provides  a  better  indication  of  our  underlying  business  performance.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
(3)  Diluted  shares  used  to  calculate  net  loss  per  share  on  a  non-GAAP  basis  provided  for  informational  purposes  only.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
Infinera  Corporation                                                                                                                
Condensed  Consolidated  Balance  Sheets                                                                              
(In  thousands,  except  par  values)                                                                                      
(Unaudited)                                                                                                                                  
                                                                                                                                                        
                                                                                                December  28,      December  29,  
                                                                                                        2013                      2012          
                                                                                              -------------    -------------  
ASSETS                                                                                                                                            
                                                                                                                                                        
Current  assets:                                                                                                                          
    Cash  and  cash  equivalents                                        $          124,330    $          104,666  
    Short-term  investments                                                          172,660                  76,146  
    Accounts  receivable,  net  of  allowance  for                                                                  
      doubtful  accounts  of  $43  in  2013  and  $147                                                                
      in  2012                                                                                      100,643                107,039  
    Other  receivables                                                                        1,313                    2,909  
    Inventory                                                                                    123,685                127,809  
    Deferred  inventory  costs                                                              705                    1,029  
    Deferred  tax  asset                                                                      1,322                        155  
    Prepaid  expenses  and  other  current  assets                      14,412                    9,744  
                                                                                              -------------    -------------  
        Total  current  assets                                                          539,070                429,497  
                                                                                                                                                        
Property,  plant  and  equipment,  net                                        79,668                  80,343  
Deferred  inventory  costs,  non-current                                            2                        100  
Long-term  investments                                                                  64,419                    2,874  
Cost-method  investment                                                                  9,000                    9,000  
Long-term  restricted  cash                                                            3,904                    3,868  
Other  non-current  assets                                                              4,863                    2,488  
                                                                                              -------------    -------------  
        Total  assets                                                              $          700,926    $          528,170  
                                                                                              =============    =============  
                                                                                                                                                        
LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                                                                
                                                                                                                                                        
Current  liabilities:                                                                                                                
    Accounts  payable                                                          $            39,843    $            61,428  
    Accrued  expenses                                                                        22,431                  26,288  
    Accrued  compensation  and  related  benefits                      33,899                  22,325  
    Accrued  warranty                                                                        12,374                    7,262  
    Deferred  revenue                                                                        32,402                  26,744  
                                                                                              -------------    -------------  
        Total  current  liabilities                                                140,949                144,047  
                                                                                                                                                        
    Long-term  debt                                                                          109,164                            -  
    Accrued  warranty,  non-current                                              10,534                    9,220  
    Deferred  revenue,  non-current                                                4,888                    3,210  
    Deferred  tax  liability                                                              1,364                        117  
    Other  long-term  liabilities                                                  16,217                  15,440  
                                                                                                                                                        
Commitments  and  contingencies                                                                                              
                                                                                                                                                        
Stockholders'  equity:                                                                                                              
    Preferred  stock,  $0.001  par  value                                                                                  
        Authorized  shares  -  25,000  and  no  shares                                                                
          issued  and  outstanding                                                                -                            -  
    Common  stock,  $0.001  par  value                                                                                        
        Authorized  shares  -  500,000  as  of  December                                                            
          28,  2013  and  December  29,  2012                                                                                  
        Issued  and  outstanding  shares  -  119,887  as                                                            
          of  December  28,  2013  and  112,461  as  of                                                                  
          December  29,  2012                                                                      120                        112  
    Additional  paid-in  capital                                              1,025,661                930,618  
    Accumulated  other  comprehensive  loss                                (3,486)                (2,228)
    Accumulated  deficit                                                              (604,485)            (572,366)
                                                                                              -------------    -------------  
    Total  stockholders'  equity                                                  417,810                356,136  
                                                                                              -------------    -------------  
        Total  liabilities  and  stockholders'  equity  $          700,926    $          528,170  
                                                                                              =============    =============  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
Infinera  Corporation                                                                                                                
Condensed  Consolidated  Statements  of  Cash  Flows                                                          
(In  thousands)                                                                                                                            
(Unaudited)                                                                                                                                  
                                                                                                                                                        
                                                                                                        Twelve  Months  Ended          
                                                                                              ----------------------------  
                                                                                                December  28,      December  29,  
                                                                                                        2013                      2012          
                                                                                              -------------    -------------  
Cash  Flows  from  Operating  Activities:                                                                              
Net  loss                                                                              $          (32,119)  $          (85,330)
Adjustments  to  reconcile  net  loss  to  net                                                                        
  cashused  in  operating  activities:                                                                                    
    Depreciation  and  amortization                                              24,562                  23,661  
    (Recovery  of)  provision  for  other                                                                                  
      receivables                                                                                      (88)                          -  
    Provision  for  doubtful  accounts                                                  55                          94  
    Amotization  of  debt  discount  and  issuance                                                                  
      costs                                                                                              4,522                            -  
    Amortization  of  premium  on  investments                              1,539                    2,068  
    Stock-based  compensation  expense                                        31,976                  41,819  
    Non-cash  tax  benefit                                                                          -                          (7)
    Other  gain                                                                                        (243)                    (475)
    Changes  in  assets  and  liabilities:                                                                                
        Accounts  receivable                                                                6,341                (26,517)
        Other  receivables                                                                    1,435                  (1,894)
        Inventory                                                                                  (3,036)              (40,623)
        Prepaid  expenses  and  other  assets                                  (4,992)                  2,293  
        Deferred  inventory  costs                                                          395                    5,741  
        Accounts  payable                                                                  (20,202)                15,410  
        Accrued  liabilities  and  other  expenses                        11,272                    6,915  
        Deferred  revenue                                                                      7,337                    3,763  
        Accrued  warranty                                                                      6,426                    3,616  
                                                                                              -------------    -------------  
            Net  cash  provided  by  (used  in)  operating                                                            
              activities                                                                          35,180                (49,466)
                                                                                                                                                        
Cash  Flows  from  Investing  Activities:                                                                              
    Purchase  of  available-for-sale  investments                (288,140)              (54,150)
    Proceeds  from  sale  of  available-for-sale                                                                    
      investments                                                                                  2,850                  11,584  
    Proceeds  from  maturities  and  calls  of                                                                          
      investments                                                                              125,624                117,605  
    Proceeds  from  disposal  of  assets                                                  3                            1  
    Purchase  of  property  and  equipment                                  (21,068)              (25,395)
    Reimbursement  of  manufacturing  capacity                                                                      
      advance                                                                                                  -                          50  
    Change  in  restricted  cash                                                            (69)                    (827)
                                                                                              -------------    -------------  
            Net  cash  provided  by  (used  in)  investing                                                            
              activities                                                                      (180,800)                48,868  
                                                                                                                                                        
Cash  Flows  from  Financing  Activities:                                                                              
    Proceeds  from  issuance  of  debt,  net                                144,469                            -  
    Proceeds  from  issuance  of  common  stock                            23,185                  11,580  
    Repurchase  of  common  stock                                                    (1,544)                    (882)
                                                                                              -------------    -------------  
        Net  cash  provided  by  financing  activities                166,110                  10,698  
                                                                                                                                                        
Effect  of  exchange  rate  changes  on  cash                                  (826)                      108  
                                                                                                                                                        
Net  change  in  cash  and  cash  equivalents                              19,664                  10,208  
Cash  and  cash  equivalents  at  beginning  of                                                                      
  period                                                                                            104,666                  94,458  
                                                                                              -------------    -------------  
Cash  and  cash  equivalents  at  end  of  period          $          124,330    $          104,666  
                                                                                              =============    =============  
                                                                                                                                                        
Supplemental  disclosures  of  cash  flow                                                                              
  information:                                                                                                                              
    Cash  paid  for  income  taxes                                      $              2,135    $                  923  
    Cash  paid  for  interest                                              $              1,320    $                      -  
Supplemental  schedule  of  non-cash  financing                                                                  
  activities:                                                                                                                                
    Non-cash  settlement  for  manufacturing                                                                          
      capacity  advance                                                        $                      -    $                  275  
    Transfer  of  inventory  to  fixed  assets                $              5,458    $              3,222  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
---------------------------------------------------------------------              
Infinera  Corporation                                                                                                                
Supplemental                                                                                                                                
  Financial                                                                                                                                    
  Information                                                                                                                                
(Unaudited)                                                                                                                                  
                                                                                                                                                        
----------------------------------------------------------------------------
                                          Q1'12    Q2'12    Q3'12    Q4'12    Q1'13    Q2'13    Q3'13    Q4'13  
----------------------------------------------------------------------------
Revenue  ($  Mil)            $104.7  $93.5    $112.2  $128.1  $124.6  $138.4  $142.0  $139.1
Gross  Margin  %  (1)        40%        37%        39%        36%        36%        39%        49%        41%    
----------------------------------------------------------------------------
Invoiced  Shipment                                                                                                                      
  Composition:                                                                                                                              
Domestic  %                        71%        70%        70%        63%        63%        64%        73%        54%    
International  %              29%        30%        30%        37%        37%        36%        27%        46%    
Largest  Customer  %        13%        15%        13%        13%        14%    <  10%      17%        11%    
----------------------------------------------------------------------------
Cash  Related                                                                                                                                
  Information:                                                                                                                              
Cash  from  (used  in)                                                                                                                  
  Operations  ($  Mil)    ($5.8)($22.7)($29.3)    $8.3  ($21.3)  $17.9    $12.8    $25.8  
Capital  Expenditures                                                                                                                
  ($  Mil)                          $13.6      $6.1      $2.5      $3.2      $4.9      $4.5      $4.2      $7.5  
Depreciation  &                                                                                                                            
  Amortization  ($                                                                                                                        
  Mil)                                  $5.5      $5.7      $6.1      $6.4      $6.3      $6.3      $5.9      $6.0  
DSO's                                    57          55          74          76          82          64          56          66    
----------------------------------------------------------------------------
Inventory  Metrics:                                                                                                                    
Raw  Materials  ($                                                                                                                        
  Mil)                                $15.3    $14.8    $12.4    $13.0    $12.2      $9.8    $12.1    $14.3  
Work  in  Process  ($                                                                                                                    
  Mil)                                $41.6    $49.4    $59.8    $57.3    $53.1    $41.0    $45.7    $49.2  
Finished  Goods  ($                                                                                                                      
  Mil)                                $44.7    $50.9    $46.3    $57.5    $65.7    $70.5    $65.7    $60.2  
----------------------------------------------------------------------------
Total  Inventory  ($                                                                                                                    
  Mil)                                $101.6  $115.1  $118.5  $127.8  $131.0  $121.3  $123.5  $123.7
Inventory  Turns  (1)      2.5        2.1        2.3        2.6        2.4        2.8        2.3        2.6    
----------------------------------------------------------------------------
Worldwide  Headcount    1,210    1,228    1,235    1,242    1,219    1,238    1,296    1,318  
----------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
--------------------                                                                                                                
(1)  Amounts  reflect  non-GAAP  results.  Non-GAAP  adjustments  include  non-cash  
  stock-based  compensation  expense.                                                                                    
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
 

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